Partners Group, a Switzerland-based investment firm, is looking to raise a further €655 million ($689 million) in March for the final close of its €1.3 billion global infrastructure fund, and South Korea’s Public Officials Benefit Association (POBA) will invest €40 million in the fund.
Other South Korean institutional investors, including the Military Mutual Aid Association, Teachers’ Pension and the National Federation of Fisheries Cooperatives, are also considering investing in the blind-pool fund with a 10-year maturity, which is expected to deliver annual returns of 8 to 12%, according to investment banking sources.
Partners Group has been raising the infrastructure fund since 2015 and already attracted €1.3 billion. It has begun investing in the US, Europe and other developed countries. The fund is targeting power-generation facilities, roads, harbors and other infrastructure assets.
As a larger number of investors are competing for infrastructure assets, Partners Group is understood to have suggested differentiated strategies: when buying infrastructure assets, they will also acquire the management companies to improve their management efficiency. In general, infrastructure funds invest hundreds of millions to several billions of dollars in assets, from which they earn cash dividends.
“Partners Group shows strength in private equity secondary markets. They are adding the tactics of buyout PE for the acquisition of infrastructure assets,” said one of the investment banking sources.
POBA, a $8 billion savings fund for South Korean government employees, saw the investment strategy of Partners Group as fresh, amid caution about high valuations of major infrastructure assets.
“Although they may not be safe assets coming with government guarantees, we can invest in them if they show a different strategy,” a POBA source told the Korea Economic Daily.
The investment review committee of POBA approved on Feb. 28 of investing €40 million in the infrastructure fund of Partners Group.
The fundraising comes as the US power industry is in a transition period from coal-fired and nuclear power plants to gas-fired and renewable energy, with Europe stepping up investments in renewable energy.
By Daehun Kim and JiHoon Lee
<Edited by Yeonhee Kim>